G/RO/W/184  
 
7 May 2019  
(19-3111) Page: 1/10 
Committee on Rules of Origin  Original: English  
 
 
RULES OF ORIGIN BASE D ON A CHANGE OF TAR IFF CLASSIFICATION  
The following submission, dated 3 May 2019, is being circulated at the request of the delegation of 
Tanzania, on behalf of the LDC Group . 
_______________  
 
Almost four years have now passed from the adoption of the Nairobi Decision on preferential rules 
of origin for LDCs. Some progress has been recorded in achieving better transparency t hrough the 
adoption of a notification template and the notification of the utilization rates of the Duty Free a nd 
Quote Free schemes. However there has not been parallel progress in implementing the substantive 
part of the Nairobi Decision, more precisely the paragraphs concerning the substantial 
transformation and certification requirements. As we are now approach ing the next 
WTO Ministerial  Conference, it is of paramount importance to show that concrete progress has been 
made that could be adequately reflected in the outcome of the forthcoming Ministerial. Thus it is 
now time to focus the debate in the Committee o n Rules of Origin (CRO) on how to effectively 
implement the substantive aspects of the Nairobi Decision on preferential rules of origin for LDCs  
The LDC WTO group intends to progressively bring to the attention of the CRO the substantive 
aspects of rules o f origin of preference giving countries that needs reform by contrasting them with 
the relevant paragraphs of the Nairobi Decision and identified best practices. The ultimate goal is to 
achieve better utilization of the Duty Free Quota Free (DFQF) schemes and thus the development 
objectives of the UN Sustainable Development Goals (SDG), namely 17 target 17 12: Ensuring that 
preferential rules of origin applicable to imports from least developed countries are transparent and 
simple, and contribute to facilit ating market access.  
In order to focus the debate, the LDC WTO group will submit a series of technical notes on each of 
the methodologies to define substantial transformation, namely a) ad valorem  percentage criterion, 
b) change of tariff classification c) specific working or processing as well as cumulation and 
certification procedure.  
A first technical presentation on the change of tariff classification (CTC) has been made by the LDC 
Group in Oc tober (RD/RO/72) where several items have emerged. This note, without being 
exhaustive, further examines such initial considerations and lists some best practices.   
It is recalled that paragraph 1.2 of the Nairobi Decision provides as follows:  
1.2 When ap plying a change of tariff classification criterion to determine substantial 
transformation, Preference -granting Members shall:  
a)  As a general principle, allow for a simple change of tariff heading or change of tariff 
sub-heading;  
b)  Eliminate all exclus ions or restrictions to change of tariff classification rules, except 
where the Preference -granting Member deems that such exclusions or restrictions are 
needed, including to ensure that a substantial transformation occurs;  
c)  Introduce, where appropriate , a tolerance allowance so that inputs from the same 
heading or sub -heading may be used.  
According to such paragraph the general principle for applying a CTC is a change of tariff heading 
(CTH) or a change of tariff subheading (CTSH).  G/RO/W/184  
 
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  The second subparagraph (b) calls for an elimination of all exclusions or restrictions on such general 
principle of applying CTH or CTSH as general rules " except where the Preference -granting Member 
deems that such exclusions or restrictions are needed, including to ensure that a substantial 
transformation occurs. " 
In addition, Paragraph 1.4 covers situations where a combination of two requirements have to be 
complied with to obtain originating status. As examined in Annex I, both the EU and Japan use 
extensively a co mbination of CTC with other requirements. These combinations take the form of not 
using particular materials or combining the CTC requirement with an ad valorem percentage.   
1.4. Preference -granting Members shall, to the extent possible, avoid requirement s which 
impose a  combination of two or more criteria for the same product. If a Preference -granting 
Member still requires maintaining a combination of two or more criteria for the same product, 
that Preference -granting Member remains open to consider relax ing such requirements for 
that specific product upon due request by an LDC .  
CTC rules are mostly applied by EU; Norway; Japan; and Switzerland. China is applying a CTH rule 
as alternative and India, in conjunction with an ad valorem  percentage. The scope of this note is 
limited for the time being to the CTC as applied by the EU; Norway; Japan; and Switzerland. 
(Hereinafter the CTC Group).  
It is recognized that following the reform of the EU rules of origin in 2011, there have been significant 
positive changes in the EU rules of origin that have been also adopted by Switzerland and Norway. 
It is also recognized that Japan has liberalized the rules of origin for chapter 61, garments, knitted 
or crocheted. As outlined in the submission of the WTO LDC in 20 141, in a number of cases the EU 
rules of origin have provided best practices that should be adopted by the remaining preference 
giving countries. Such occurrences have been outlined in the above -mentioned submission. 
Nevertheless  it should be noted that also in the case of the EU; Norway; and Switzerland there are 
product specific rules of origin especially in agro -processing sector where further improvements may 
be necessary. As suggested in this note several steps could also be undertaken by Japan to engage 
in an overall reform of rules of origin for LDCs  
The issues to be considered to bring into conformity with the paragraph 1.2 and 1.4 of the Nairobi 
decisions the current use of the CTC criterion by the CTC group are threefold : 
a) The exceptions to the general rules of CTH and CTSH are the norm rather than the exception 
for the CTC group. For instance the rules of origin of Japan provides for CTH as a general rule, 
however there are 26 pages of exceptions2 to such general rule covering the majority of the 
HS chapters and at time entire HS chapters;  
b) The exceptions to the general rules are by far much stricter than the general rules going 
beyond any conceivable requirement for substantial transformation and as such they are not  
justifiable;  
c) In some cases, the same preference giving countries have adopted more lenient rules of origin 
for the same products under FTAs that they have negotiated with other partners and/or there 
are existing best practices under other FTAs on how s ubstantial transformation could be 
achieved adopting less stringent requirements.  
Annex I of this note contains examples of such rules of origin that have been summarized in a 
comparative table of products specific exception to the general CTH and CTSH of EU, Switzerland 
Norway and Japan. Such table is not exhaustive and complete. The table has been assembled to 
start a constructive debate.  
Such comparison outlines a number of examples where the preference giving countries are invited 
to introduce reforms to bring such rules of origin in conformity with the relevant paragraph of the 
Nairobi decision.  
                                                      
1 See WTO document G/RO/W/148 of 28 October 2014 "Challenges faced by LDCs in complying with 
preferential rules of origin under unilateral schemes ". 
2 See website of Japan Ministry of Foreign Affairs at https://www.mofa.go.jp/files/000077857.pdf . G/RO/W/184  
 
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  i. CTC rules of origin with restrictions and exceptions (in the EU, Switzerland, Norway and 
Japan): why are they needed? How they can be justified in light of more liberal rules used in 
FTAs?  
ii. CTC rules of origin in combination with value requirements (e.g. CTH and 40% Value of 
non-originating material (VNOM): these rules should be avoided unless they are needed. Can 
Members who use such rules explain why the y are needed or justified  
iii. Bring examples of best practices and bring examples of difficulties in meeting combination 
rules or rules with restrictions.  
_______________   
  G/RO/W/184  
 
- 4 - ANNEX  
EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
Chapter 9  
Coffee, tea, maté 
and spices;  Manufacture from 
materials of any 
heading   Change of Tariff Heading 
(CTH)  While in this case the General CTC 
rule of CTH and CTSH are 
respected, there is a significant 
variation between the EU 
requirement providing for 
manufacture from any heading 
that includes the material 
classified in the same heading. i. e. 
a change of tariff subheading. In 
the case of Japan, the CTH 
requirement excludes that the 
process of roasting of decaffeinate 
the coffee is substantial 
transformation.  Heading 09.01 
coffee is 
subdivided in 
09.01 Coffee:  
0901.11 – Not 
decaffeinated  
0901.12 – 
Decaffeinated -
Coffee roasted  
0901.21 – Not 
decaffeinated  
0901.22 -- 
Decaffeinated 
0901.90 – Other  Manufacture from 
materials of any heading 
or CTSH.  
Such rule would recognize 
that roasting and 
decaffeinating and 
blending coffee is a 
substantial 
transformation.  
 
The Product specific rules 
of origin in the EU -Japan 
FTA is: CTSH; or 
Blending.  
Chapter 16  
Preparations of 
meat, of fish or 
of crustaceans, 
molluscs or other 
aquatic 
invertebrates  Manufacture:  
— from materials of 
any heading, except 
meat and edible meat 
offal of Chapter 2 and 
materials of Chapter 
16 obtained from 
meat and edible meat 
offal of Chapter 2, 
and  
— in which all the 
materials of Chapter 3 
and materials of 
Chapter 16 obtained 
from fish  and 
crustaceans, molluscs 
and other aquatic 
invertebrates of 
Chapter 3 used are 
wholly obtained  Preparations of meat, of fish or of crustaceans, molluscs 
or other aquatic invertebrates  Both CTC requirements are far 
exceeding the general CTH and 
CTSH as th ey exclude a number of 
HS chapters classifying materials 
that are the primary components 
of the products of chapter 16 i.e. 
for canned products like tuna and 
sausages the rules requires that 
the tuna and the meat are wholly 
obtained in the case of the EU. In 
the case of Japan, the exclusions 
are much more encompassing 
since they exclude the use not 
only of meat but also of live 
animals of chapter 1. In addition, 
the first rule of japan also exclude 
the use of other ingredients that 
can be used to prepare fi nished 
products of chapter 16 such as 
rice, cereals, pasta products of 
chapter 19 etc.  The 
manufacture of 
processed 
foodstuff from 
ingredients 
should be 
considered a 
substantial 
transformation 
as it is normally 
a demanding 
industrial 
operation  
 
 A change to headings 
1601 through 1605 from 
any other chapter  (US-
Singapore FTA) . 
 
Such rule would recognize 
that making food 
preparations from primary 
products is a substantial 
transformation . 1) Containing less than 
30% by weight of a meat 
and edible meat offal of 
bovine animals other than 
internal organs and 
tongues (containing rice), 
and cuttlefish and squid 
(containing rice) (prepared 
or preserved) other than 
those in airtight containers  Manufactured from 
products other than those 
of Chapter 1, 2, 3, 5, 10, 
11, 16 or 19  
2) Other  Manufactured from 
products other than those 
of Chapter 1, 2, 3, 5 or 
16  
  G/RO/W/184  
 
- 5 - EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
Chapter 19 
Preparations of 
cereals, flour, 
starch or milk; 
pastrycooks’ 
products  Manufacture from 
materials of any 
heading, except that 
of the product, in 
which:  
— the weight of the 
materials of Chapters 
2, 3 and 16 used does 
not exceed 20% of 
the weight of the final 
product, and  
— the weight of the 
materials of headings 
1006 and 110 1 to 
1108 used does not 
exceed 20 % of the 
weight of the final 
product, and  
— the individual 
weight of sugar (1) 
and of the materials 
of Chapter 4 used 
does not exceed 40 % 
of the weight of the 
final product, and  
— the total combined 
weight of sugar (1) 
and the materials of 
Chapter 4 used does 
not exceed 60 % of 
the weight of final 
product  19.01 Malt extract; food preparations of flour, groats, 
meal, starch or malt  extract, not containing cocoa or 
containing less than 40% by weight of cocoa calculated 
on a totally defatted basis, not elsewhere specified or 
included; food preparations of goods of headings 04.01 
to 04.04, not containing cocoa or containing less than 
5% by weight of cocoa calculated on a totally defatted 
basis, not elsewhere specified or incl uded:  Both rules by the EU and Japan 
are going far beyond the general 
requirement of CTH and CTSH as 
they are either limiting and/or 
excluding the use of a number of 
ingredients that are the essential 
components of products of chapter 
19. 
In the case of th e EU the rule 
requires to limit the use a) of 
non-originating fish and meat and 
preparations b) rice, wheat, 
starches and sugar.  
In the case of Japan, the rules are 
much more demanding since they 
are excluding altogether the use of 
non-originating material s classified 
in entire chapters of the HS as 
detailed in the rule for the specific 
headings 19.01 to 19.05  
The practice by Japan to assign 
different rules of origin within a 
heading on the basis of 
descriptions that are not matching 
the HS like in the cas e of heading 
19.01, is quite difficult to 
administer. In fact it requires a 
double exercise of 1) classifying 
goods to apply the correct origin 
requirement and 2) comply with 
the applicable rules of origin.  The compliance 
with such rules 
requiring not to 
use portion of 
ingredients or 
not use them at 
all are difficult 
to administer 
requiring 
sophisticated 
accounting 
techniques. 
MSMEs in LDCs 
may not 
possess the 
accounting  
expertise 
required to 
comply with 
such rules.  A change to headings 
1901 through 1905 from 
any other chapter.  
This rule would recognize 
that the making of pasta 
products and other 
products of chapter 19 
products from primary 
products of other chapters 
is a substantial 
transformation.  (1) Malt extract  Manufactured from 
products other tha n those 
of Chapter 10, 11 or  19 
(2) Food preparations, 
containing more than 85% 
by weight of flour, groats, 
meal and pellets of rice, 
wheat, triticale or barely, 
starch, or any combination 
thereof, excluding cake -
mixes and a kind used as 
infant food or dietetic 
purpose (mostly containing 
starch） Manufactured from 
products other than those 
of Chapter 4, 7, 8, 10, 11 
or 19 
(3) Other:  
(i) Containing not less than 
50% of sucrose by weight  Manufactured from 
products other than those 
of Chapter 4, 7, 8, 10, 
11, 12, 17 or 19  
(ii) Other  Manufactured from 
products other than those 
of Chapter 4, 10, 11 or 
19 
19.02 Pasta, whether or 
not cooked or stuffed (with 
meat or other substances) 
or otherwise pre -pared, 
such as spaghetti, 
macaroni, noodles, 
lasagne, gnocchi, ravioli, 
cannelloni; couscous, 
whether or not prepared  Manufactured from 
products other than those 
of Chapter 10, 11 or 19   
19.03 Tapioca and 
substitutes therefor 
prepared from starch, in 
the form of flakes, grains, Manufactured from 
products other than those 
of Chapter 7, 8, 10, 11 or 
19  
  G/RO/W/184  
 
- 6 - EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
pearls, siftings or in similar 
forms  
19.04 Prepared foods 
obtained by the swelling or 
roasting of cereals or 
cereal products (for ex -
ample, corn flakes); 
cereals (other than maize 
(corn)) in grain form or in 
the form of flakes or other 
worked grains (except 
flour, groats and meal), 
pre-cooked o otherwise 
prepared, not elsewhere 
specified or included  Manufactured from 
products other than those 
of Chapter 10, 11 or 19  
19.05 Bread, pastry, cakes, biscuits and other bakers' 
wares, whether or not containing cocoa; communion 
wafers, empty cachets of a kind suitable for 
pharmaceut ical use, sealing wafers, rice paper and 
similar products:   
(1) Sweet biscuits, Arare, 
Senbei and similar rice 
products, biscuits, cookies 
and crackers, crisp savoury 
food products, made from 
a dough based on potato 
powder  Manufactured from 
products other than those 
of Chapter 7, 8, 10, 11 
or19 
(2) Other  Manufactured from 
products other than those 
of Chapter 11(excluding 
those of Chapter 11 
manufactured from 
products of Chapter 7,8 
or 10, in the originating 
country or territory of the 
products of 19.05(2) on 
this list) or 19   
  G/RO/W/184  
 
- 7 - EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
Heading 20.06  
Vegetables, fruit, 
nuts, fruit -peel 
and other parts 
of plants, 
preserved by 
sugar (drained, 
glacé or 
crystallised)  Manufacture in which 
the value of all the 
materials of Chapter 
17 used does not 
exceed 30% of the 
ex-works price of the 
product  Vegetables, fruit, nuts, 
fruit-peel and other parts 
of plants, preserved by 
sugar (drained, glacé or 
crystallised)  Manufactured from 
products other than those 
of Chapter 7, 8, 9, 12, 17 
or 20 The EU rules only place a 
limitation on the use of sugar of 
chapter 17. The Japan rule 
excludes the use of products 
classified in chapter 7 and 8 and 
other HS chapters as described in 
the rule. This rule is far exceeding 
any requirement of substantial 
transformation since it requires 
that almost all ingredients are 
originating.     A change to a good of 
heading 20.06 from any 
other chapter.  
Such rule would be 
recognized as substantial 
transformation the 
process of making of such 
product from primary 
products of chapter 7 and 
8 using non -originating 
sugar of chapter 17.  
Heading 33.02  
Essential oils and 
resinoids; 
perfumery, 
cosmetic or toilet 
preparations; 
except for:  Manufacture from 
materials of any 
heading, except that 
of the product. 
However, mate rials of 
the same heading as 
the product may be 
used, provided that 
their total value does 
not exceed 20 % of 
the ex -works price of 
the product  
or Manufacture in 
which the value of all 
the materials used 
does not exceed 70 % 
of the ex -works price 
of the pr oduct  Mixtures of odoriferous 
substances and mixtures 
(including alcoholic 
solutions) with a basis of 
one or more of these 
substances, of a kind used 
as raw materials in 
industry; other 
preparations based on 
odoriferous substances, of 
a kind used for the 
manufacture of beverages  Manufactured from 
products other than those 
of heading 33.02, 
provided that the value of 
non-originating products 
used does not exceed 50 
% of the value of the 
products  Both rules under EU and Japan are 
requiring in addition to a CT C at 
CTH level to meet an ad valorem 
percentage criterion.   
The Japan rule is more restrictive 
since it requires a cumulative 
requirement and each requirement 
is more restrictive that under the 
EU rules. i.e. a specific restriction 
on using heading 33.02 and a 
lower threshold 40% of VNOM.  Products of 
heading 3302 
are usually 
obtained by 
mixing in 
deliberate 
components and 
percentages of 
other primary 
materials 
heading 3301.  A change to a good of 
heading 33.02 through  
33.07 from any other 
heading.  
 
 
Heading 44.16  
Casks, barrels, 
vats, tubs and 
other coopers' 
products and 
parts thereof, of 
wood, including 
staves  Manufacture from 
materials of any 
heading, except that 
of the product or 
Manufacture in which 
the value of all the 
materials used does 
not exc eed 70 % of 
the ex -works price of 
the product  
 Casks, barrels, vats, tubs 
and other coopers' 
products and parts thereof, 
of wood, including staves  Manufactured from 
products other than those 
of heading 44.16 
excluding staves of wood 
(riven staves only one 
principal surface of which 
has been sawn, or sawn 
staves at least one 
principal surface of which 
has been curvilinearly 
sawn, each of which has 
not been worked other 
than sawing)  In this case the EU rules  requires  
a CTH or  ad valorem percentage 
requirem ent of 70% .The CTH 
requirements means that 
assembly of staves  into barrels is 
not origin conferring .Thus the 
only alternative is to comply with 
the 70% ad valorem percentage. 
In the case of Japan the rule 
excludes all parts of barrels of HS 
44.16 exclud ing staves of wood as 
further specified in the rule. In 
both cases the rules appear 
overtly stringent as making barrels Heading 44.16 
is restricted to 
products of the 
coopers’ trade. 
The heading 
also covers 
parts of articles 
of heading 
4416.It means 
that there is no 
CTC possible 
within the 
heading.      Given the complexity of 
the rule of 44.16 The LDC 
WTO group will table a 
proposal at a later stage   
  G/RO/W/184  
 
- 8 - EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
from staves is a rather complex 
manufacturing operation   
Heading 52.07  
Yarn and thread 
of cotton  Spinning of natural 
fibres or extrusion of 
man-made fibres 
accompanied by 
spinning  Cotton yarn (other than 
sewing thread) put up for 
retail sale  Manufactured from 
chemical products, from 
products of heading 
47.01 to 47.06, or from 
natural textile fibres, 
man-made staple fibres 
or textile fibre waste, 
neither carded nor 
combed  In this case the EU is not using a 
CTC but a specific working or 
processing operations requiring to 
carry out the spinning and the 
extrusion. The Japan rules 
requires that the textiles fibres are 
no carded or combed and 
additionally not use wood pulp or 
other cellulose materials classified 
from heading 47.01 to 47.06. This 
latter use of CTC rule appears to 
be an additional requirement of 
extraordinary complexity.  Heading 5207 is 
composed of 
two 
subheadings:  
5207.10: 
containing 85% 
or more by 
weight of cotton  
5207.90 other  
  Given the complexity of 
the chapter including 
products of a different 
nature The LDC WTO 
group will table a proposal 
at a later stage  
Chapter 65  
Footwear, gaiters 
and the like; 
parts of such 
articles; except 
for: Manufacture from 
materials of any 
heading, except from 
assemblies of uppers 
affixed to inner soles 
or to other sole 
components of 
heading 6406  Manufacture from products other than those of the 
different tariff heading (excluding heading 64.06) of the 
product  The EU rules is rather liberal since 
it allows a CTH, only excluding the 
use of particular parts of shoes 
that are assemblies of uppers 
affixed to inner soles to other sole 
components. This means that all 
other parts of shoes can be used 
to assemble shoes. In the case of 
Japan the use of non -originating 
parts of shoes is not allowed as it 
excluded all materials classified in 
heading 6406.     Parts of shoes 
are classified 
under heading 
64.06 that is 
further 
subdivided in 5 
subheadings   
Heading 72.16  
Flat-rolled 
products, bars 
and rods, angles, 
shapes and 
sections of iron 
or non -alloy steel  Manufacture from 
ingots or other 
primary forms or  
semi-finished 
materials of heading 
7206 or 7207  Angles, shapes and 
sections of iron or non -
alloy steel  Manufactured from 
products other than those 
of heading 72.07 to 
72.16  Under the EU rules The CTC 
required the manufacturing of 
angles shape and sections  from 
two specific heading, namely   
7206(ingots) or 7207 
(semi -finished products obtained 
by hot rolling or forging ingots). In 
the case of Japan the same rules 
are excluding products of heading 
7207. This means the process of 
forging or hot rolling has t o be 
carried out in LDCs.   Given the complexity of 
the chapter including 
products of a different 
nature The LDC WTO 
group will table a proposal 
at a later stage   
  G/RO/W/184  
 
- 9 - EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
Chapter 84,  
chapter rule  
Nuclear reactors, 
boilers, 
machinery and 
mechanical 
appliances; parts 
thereof; except 
for: Manufacture from 
materials of any 
heading, except that 
of the product or 
Manufacture in which 
the value of all the 
materials used does 
not exceed 70% of 
the ex -works price of 
the product.                                                         Change of Tariff 
Heading (CTH)  The EU rules of origin are 
obviously more lenient than the 
Japanese since they allow Change 
of tariff heading or to fulfil 
ad valorem  70% of VNOM.  
The Japanese rule formally comply 
with the paragraph 2.1 of the 
Nairobi. However given the nature 
of the HS there are a series of 
heading where a CTH rule applied 
across the chapter is 
counterintuitive and demanding. 
As an example few would question 
that the assembly of parts of turbo 
jets or rocket engines into finished 
engines of turbo jets and rocket 
engines of 84.12 is a substantial 
transformation. However a CTH 
rule does not recognize such 
complex processes as origin 
conferring.    Chapter 84 is a 
complex HS 
chapter with 87 
heading and the 
HS has not been 
conceived for 
rules of origin 
purposes   Given the complexity of 
the chapter including 
products of a different 
nature The LDC WTO 
group will table a proposal 
at a later stage.     
Chapter 85,  
chapter  rule  
Electrical 
machinery and 
equipment and 
parts thereof; 
sound recorders 
and reproducers, 
television image 
and sound 
recorders and 
reproducers, and 
parts and 
accessories of 
such articles; 
except for.  Manufacture from 
materials of any 
heading, except th at 
of the product or 
Manufacture in which 
the value of all the 
materials used does 
not exceed 70 % of 
the ex -works price of 
the product.  Electrical machinery and 
equipment and parts 
thereof; sound recorders 
and reproducers, television 
image and sound recor ders 
and reproducers, and parts 
and accessories of such 
articles  Manufactured from 
products provided that 
the value of non -
originating products used 
of the different tariff 
heading from that of the 
products does not exceed 
40 % of the value of the 
products , and the value 
of non -originating 
products used of the 
same tariff heading as 
that of the product does 
not exceed 5 % of the 
value of the products  In the case of Japan  the General 
CTC rule of CTH and CTSH is  not 
respected since there is an  
additional r equirement that the 
material classified in another 
heading not to exceed 40% VNOM. 
The CTC rules of Japan is placing a 
limitation on the use of 
non-originating materials classified 
in other heading of 40% of the 
value of the finished product. In 
the contex t of such rule the 5% 
allowance of non -originating  
materials classified in the same 
heading does not liberalize the 
rule.  
The EU rules of origin are 
obviously more lenient than the 
Japanese since they allow Change 
of tariff heading(a general 
tolerance ru le of up to 15% of the 
value of the product) or to fulfil 
ad valorem  70% of VNOM   Given the complexity of 
the chapter including 
products of a different 
nature The LDC WTO 
group will table a proposal 
at a later stage.   
  G/RO/W/184  
 
- 10 - EU Japan  
Comments  Technical 
elements  Suggested Best Practice 
RoO EBA HS Chapter  
Description of 
Product  EBA Japan HS Chapter  
Description of Product  Japan RoO  
Heading 87.12  
 
Bicycles  Manufacture in which 
the value of all the 
materials used does 
not exceed 70 % of 
the ex - works price of 
the product  Bicycles  Manufactured from 
products provided that 
the value of non -
originating products used 
of the different tariff 
heading from that of the 
products does not exceed 
40 % of the value of the 
products, and the value 
of non -originating 
products used of the 
same tariff heading as 
that of the product does 
not exceed 5 % of the 
value of the products  In this case the EU is not using the 
CTC  but an ad valore m percentage 
criterion of 70%  VNOM. In the case 
of japan the General CTC rule of 
CTH and CTSH is not respected 
since there is an  
Additional requirement that the 
material classified in another 
heading not to exceed 40% VNOM. 
This means that parts of bicycl es 
classified in heading 87.14 can be 
used up to 40 of VNOM in the case 
of japan and 70% in the case of 
the EU The further provision of 
japan of allowing materials 
classified in the same heading up 
to 5% of the value of the products 
does not significantly liberalize a 
restrictive rule.   Manufacture from 
materials of any heading, 
expect that of the product 
or Assembly operation of 
parts of heading 8714 into 
a complete article 
provided that  
 
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